THE HIGH COST OF LOW PERFORMANCE | PULSE OF THE PROFESSION 2016

2016 8th Global Project Management Survey

The High Cost of Low Performance How will you improve business results?

Drive Better Results with Project Management Customers want the best products and services. Employees want better salaries. Executives want growth. If we can’t have perfection, we all want progress. But we know it’s hard to deliver consistently positive results in an uncertain and continually shifting global marketplace. Organizations that invest in project management waste 13 times less money because their strategic initiatives are completed more successfully. We know project management is essential for any organization’s success, yet the message is not being realized. As we reviewed this year’s Pulse of the Profession® data, we were hoping to see improvement over last year’s results. Instead, we saw declines in many of the success factors we track. Even more concerning, the percentage of projects meeting their goals—which had been flat for the past four years—took a significant dip. To examine this situation further, we surveyed executive leaders and PMO directors as part of this year’s Pulse research and found that, although many individuals are beginning to sharpen their focus on project management as a strategic driver, their organizations aren’t always in step. Until leaders throughout organization hierarchies trust that projects deliver strategy, I fear we will continue to see stagnant progress. And that means organizations will be less successful than they should be. It will take some work, but it can happen if we take a collective approach to help shift the thinking. Use this report and other PMI research to strengthen conversations about the quantifiable benefits project management delivers to organizations. Help drive the transformational thinking needed within your organization—because it’s together that we can do great things.

Mark A. Langley

PMI President and CEO

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PULSE OF THE PROFESSION® | 2016

SUMMARY FINDINGS Our latest Pulse research shows that compared to last year, fewer projects are being completed within budget or meeting original goals and business intent. More projects are actually failing and creating significant monetary loss for their organizations. The reasons are complex. But with worsening project outcomes, disruptive global trends, and an uncertain economy, it’s time to strengthen the conversation around the following issues, which our research indicates are essential to improving both project and business results.

LOOK BEYOND TECHNICAL SKILLS While technical skills are core to project and program management, they’re simply not enough in today’s competitive global economy, which is growing quickly, but with less predictability. The most successful organizations seek added skills in leadership and business—competencies that support and sustain long-range strategic objectives. The ideal skill set—a combination of technical, leadership, and strategic and business management expertise—is embodied in the PMI Talent Triangle™. When organizations focus on all three skill sets, 40 percent more of their projects meet goals and original business intent.

more projects meet goals and original business intent © 2010–2016 Project Management Institute. All rights reserved.

RECOGNIZE THE STRATEGIC ROLE OF AN ENTERPRISE-WIDE PROJECT MANAGEMENT OFFICE (EPMO) AND ALIGN IT TO STRATEGY By supporting the implementation of strategic programs, EPMOs play a crucial role in delivering organizational value. Yet, for many organizations, a struggle exists to define the PMO role, to position it for long-term success, and to leverage the office to help achieve strategic objectives. Effective EPMOs have a broad enterprise-wide responsibility and help direct strategy and focus on value delivery. Organizations that align their EPMO to strategy report 27 percent more projects completed successfully and 42 percent fewer projects with scope creep.

DRIVE SUCCESS WITH EXECUTIVE SPONSORS With actively engaged executive sponsors, organizations can bridge the communications gap between influencers and implementers to significantly increase collaboration and support, boost project success rates, and reduce risk. When more than 80 percent of projects have an actively engaged executive sponsor, 65 percent more projects are successful. Yet, on average, only three in five projects have engaged executive sponsors.

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2,428

192

282

Project Management Practitioners

Senior Executives

PMO Directors

In addition to tracking the annual trends in project management, we also spoke directly to executive leaders and PMO directors to capture their perspectives on why we aren’t seeing higher project success rates. This year’s report draws on our global survey of 2,428 project management practitioners, 192 senior executives, and 282 PMO directors from a range of industries, and interviews with eight corporate leaders and 10 PMO directors and directors of project management. From this research, we have made the following key discoveries:

EXECUTIVE AND PMO HEADS PERCEIVE PROJECT MANAGEMENT DIFFERENTLY Executive leaders and PMO directors do not view organizational success and the benefits of project management in the same way. They have significantly disparate views about their organization’s performance when it comes to formulating strategy, prioritizing and funding projects, executing strategic projects, and recognizing lessons learned. Additional gaps in perception exist between the benefits of using formal project management and improving risk identification and management, success with complex projects, customer satisfaction, and success with organizational change.

EXECUTIVES AND PMO LEADERS ARE BOTH OPTIMISTIC ABOUT THE FUTURE Executive leaders and PMO directors agree on the importance of improving their competitiveness over the next three years. Eight in ten executive leaders and PMO directors agree they will achieve that by formulating strategies appropriate for changing market conditions, prioritizing and funding the correct initiatives and/or projects, executing initiatives and/or projects in a way that delivers strategic results, and using lessons learned from failed projects to inform strategic planning.

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THE CHALLENGE Our 2016 Pulse findings continue to reinforce that when organizations embrace project, program, and portfolio management practices, they have better outcomes. Yet, we see little or no change in a number of key capabilities, including:

Value

Executive Sponsors

Just over half of organizations fully understand the value of project management, a number that has remained the same over the past five years.

The average percentage of an organization’s projects with active sponsors declined compared to last year: only 59 percent of projects on average have actively engaged executive sponsors.

PMO

Strategy Alignment

The percentage of organizations with a PMO has also remained the same for five consecutive years, with nearly seven in ten having a PMO. Furthermore, the types of PMOs in organizations have remained unchanged since we began tracking them six years ago; two-thirds of organizations report having a department-specific, regional, or divisional PMO(s), and nearly half of organizations report having an EPMO.

Less than half of organizations report high alignment of projects to organizational strategy, a number that has been fairly constant for the past three years. And, organizations report that, compared to last year, fewer of their projects are strategic initiatives—that is, projects designed to achieve formulated strategy (an average of 48 percent of projects, down from 54 percent in 2015).

Practices

Maturity

Nearly six out of ten organizations use standardized project management practices throughout most or all of the enterprise. But only one in four uses standardized project management practices organization-wide, a decline of three percentage points from one year ago.

The percentage of organizations with high project management maturity has not changed for the past six years. Program and portfolio management are equally established in organizations, with only one in six reporting the high maturity of each.

Training and Development

Benefits Realization

The percentage of organizations providing project management training on tools, competency development, and a defined career path remains unchanged since 2012. Just under half of organizations report having a formal knowledge transfer process—a decline of 5 percent since last year.

The percentage of organizations reporting high benefits realization maturity is at 17 percent, static for the past three years. And, the percentage of organizations reporting low maturity in benefits realization is trending upward—nearly four in ten now report low maturity.

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Figure 1: CURRENT STATE OF PROJECT OUTCOMES 70%

64%

62%

60%

55%

Met original goals/business intent

50%

Completed within original budget Completed on time

40%

Experienced scope creep Failed project’s budget lost Deemed failure

53%

51%

49% 45%

44%

34%

32%

30%

20%

16%

15% 10% 2012

2013

The lack of improvement within these capabilities coincides with weaker project outcomes. Fewer projects are meeting original goals and business intent or being completed within budget. More projects are failing and creating substantial monetary loss for their organizations (see Figure 1). More critical is the money that continues to be wasted when projects aren’t managed well. We see US$122 million wasted for every US$1 billion invested due to poor project performance, a 12 percent increase over last year. With little movement in key data points over the past five years, and a regression in the percentage of projects reaching goals, something definitely needs to change. PMI has conducted the Pulse study since 2006 to provide evidence that implementing strategy successfully is inextricably linked to an organization’s capability to deliver successful projects and programs. As we continue to see worsening project outcomes, disruptive global trends, and an uncertain economy, we want to advance the conversation. We want organizations to shift their thinking and embrace project management as a strategic competency for success. Throughout this report, you will discover approaches to addressing this ongoing challenge.

2014

2015

2016

More critical is the money that continues to be wasted when projects aren’t managed well. We see US$122 million wasted for every US$1 billion invested due to poor project performance, a 12 percent increase over last year.

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THE WORLD AROUND US Despite a global economy that is still uncertain and the rapid evolution of new business trends, we find many examples of project, program, and portfolio managers who deliver value to their organizations and help them stay relevant and competitive. As the global advocate for the profession, we continue to track a number of universal trends impacting project management. Disruptive change is prevalent. The acceleration of technology and digitization, including the Internet of Things and social media, has created a hyper-connected, borderless world, with new industries and opportunities for project and program managers. And the number and complexity of projects are increasing, a fact recognized by alert executive leaders.

“ There’s a lot more that you have to pay attention to as an organization and therefore the projects have to do the same.” Norm Fjeldheim | Senior Vice President and CIO Qualcomm

“There’s a lot more that you have to pay attention to as an organization and therefore the projects have to do the same,” said Norm Fjeldheim, Senior Vice President and CIO at Qualcomm. Other trends that will have an impact on project management include: Cost of energy is falling as new shale oil and gas deposits are discovered, developed, and exploited with advanced extraction technologies, once again making the development of new oil and gas fields a project-rich environment. Globalization has improved business conditions in emerging and advanced economies, triggering investments in infrastructure development projects in many low- and middle-income economies. Climatic processes are approaching tipping points, and scientists and engineers are beginning to assess the feasibility of several geoengineering “quick fixes.” This will lead to the proliferation of a vast array of new projects.

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REINFORCING THE IMPORTANCE OF PROJECT MANAGEMENT Organizations and project professionals can capitalize on—not merely react to—the trends outlined previously. As these and other developments usher in change and create more projects, the demand for skilled and experienced project and program managers is on the rise. This environment of new opportunity further underscores the need for organizations to support project management as a strategically significant discipline.

Yet, our research shows that just over half of organizations fully understand the value of project management and less than two in five place a high priority on creating a culture that recognizes its importance as a driver of better project performance. Organizations that place a high priority on creating this culture report 71 percent of projects meeting original goals and business intent versus 52 percent that place a low priority on it. These results would likely not surprise the executives we interviewed who agree that a cultural mindset that values project management is vital to the business. “Project management has been one of the linchpins of our turnaround over the last couple of years,” said Peter Stern, Executive Vice President, Chief Product, People and Strategy Officer at Time Warner Cable. “The discipline of project management has made our product and technology deployments faster yet at the same time less impactful to customers, enabling us to post a gain last year of a million Internet customers and, for the first time in years, a net gain in video customers despite facing new, aggressive competitors.”

71%

of projects meeting original goals and business intent when project management culture is high priority

“ Project management has been one of the linchpins of our turnaround over the last couple of years. The discipline has made our product and technology deployments faster yet less impactful to customers.” Peter Stern | Executive Vice President,

Chief Product, People and Strategy Officer Time Warner Cable

52%

of projects meeting original goals and business intent when project management culture is low priority

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PROJECTS ARE 2.5 TIMES MORE SUCCESSFUL WHEN PROVEN PROJECT MANAGEMENT PRACTICES ARE USED

Our research further reinforces the tangible and intangible value project management provides to an organization, including risk reduction and cost saving. Over the years, analysis of our Pulse data shows that high-performing organizations have implemented proven project, program, and portfolio management practices. As a result, their projects meet original goals and business intent two-and-a-half times more often (89 percent versus 34 percent) and waste 13 times less money. Peter Panzarella, Chief Procurement Officer at Pitney Bowes, believes project management is especially important when working cross functionally. “We found it helpful in creating a standardized way to talk to our internal stakeholders,” he explained. “And we also found it much easier to report on the status of programs internally and to create a formal review process if we were using standardized methodologies and templates, and evaluating stages of the programs under uniform structure.”

89%

vs.

34%

“Without a doubt, good project management drives more success, lowers the risk, and increases the chance of success for delivering the economic value of the project.” Bill Seliger, PMP Director, Supply Chain and Project Management Fortune 500 manufacturing company

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A SHIFT IN THINKING With the deep and long-proven benefits of project management, we have to ask: Why isn’t this value being realized in project outcomes and reflected in this year’s findings? As we work to strengthen the conversation and encourage new thinking among organizations less advanced at project management, we can pinpoint the following elements that distinguish more mature organizations that achieve better results.

THEY LOOK BEYOND TECHNICAL SKILLS The dynamic, rapidly changing, complex business environment continues to emphasize the need for excellence in project, program, and portfolio management. And, while technical skills are core to project and program management, it’s even more critical to develop additional leadership, and strategic and business management skills. Organizations can help develop project and program managers who are versatile, experienced, and skilled. Yet less than one in three currently prioritize the development of technical, leadership, or business skills (see Figure 2); only 25 percent consider all three skills a priority.

Figure 2: PRIORITY OF DEVELOPING PROJECT MANAGEMENT SKILLS

100%

13%

12%

Very high

11%

Somewhat high Moderate

27%

27%

Somewhat low

26%

Very low 50%

33%

32% 19% 0%

29%

18%

10%

10%

TECHNICAL

LEADERSHIP

33% 28%

19%

30%

11% BUSINESS

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Qualcomm is among the vanguard of organizations that actively point to project and program management as a critical skill set. “We recognize it as a career path that people can take all the way up,” said Mr. Fjeldheim. “It leads into a management track, which can go all the way to director or senior director and vice president … We recognize it as being a very important skill that is critical to our success as an organization.”

“ We recognize

[project management] as a career path that people can take all the way up … a very important skill that is critical to our success as an organization.”

Organizations with a similar mindset want project, program, and portfolio managers with a broad range of skills to support long-range strategic objectives. The ideal skill set is depicted in the PMI Talent Triangle™—a combination of technical, leadership, and strategic and business management expertise (see Figure 3).

Figure 3

The PMI Talent Triangle™

Norm Fjeldheim © 2010–2016 Project Management Institute. All rights reserved.

Senior Vice President and CIO Qualcomm

When organizations focus on all three areas, 40 percent more projects meet original goals and business intent. Additional improvements are realized in managing budget, time, scope creep, and projects deemed failures (see Figure 4).

Figure 4: IMPROVE PROJECT OUTCOMES WITH THE RIGHT SKILLS 100% 80% 60%

71%

64%

61%

53%

51% 38%

40%

35%

38%

20%

13%

21%

0% MET GOALS/ INTENT

WITHIN BUDGET

Priority of all three is very or somewhat high

ON TIME

SCOPE CREEP

PROJECTS DEEMED FAILURES

Priority of all three is very or somewhat low

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Sudhakar Kesavan, Chairman and CEO at ICF International, Inc., sees an increasing need for skilled professionals. “We are doing more training across the firm to make sure people understand that project management is a learned skill,” he said, adding that an organization can’t just make decisions as they go along. “The more project management expertise we have, the less likelihood of complications with the client, overruns and cost issues,” he continued. “We need to train people so that we can have fewer issues with projects as they are run.” Our Pulse findings reflect Mr. Kesavan’s thinking. Project outcomes are significantly better in organizations that invest in ongoing project management training, offer a defined career path to those engaged in project or program management, and establish formal processes to develop project manager competencies and to transfer knowledge, when compared with organizations that invest in none of these (see Figure 5).

Figure 5: IMPROVE PROJECT OUTCOMES WITH TRAINING

71%

Has all four

54%

Has none of the four

Met goals/intent

“ The more project management expertise we have, the less likelihood of complications with the client, overruns and cost issues.” Sudhakar Kesavan | Chairman and CEO

34%

ICF International, Inc.

54% Scope creep

65% 42% Within budget

13% 21% Projects deemed failures

63% 38% On time

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THEY RECOGNIZE THE STRATEGIC ROLE OF AN EPMO AND GET IT ALIGNED TO STRATEGY By supporting the implementation of strategic programs, PMOs play a crucial role in delivering organizational value. Organizations that have a PMO with a broader business-wide responsibility, such as the EPMO, are closest to delivering such value. With responsibility to align projects and programs to corporate strategy, the EPMO establishes and oversees appropriate governance of enterprise projects, programs, and portfolios, and performs portfolio management functions to ensure strategy alignment and benefits realization. As previously noted, organizations that align their EPMO to strategy report 27 percent more projects completed successfully and 42 percent fewer projects with scope creep (see Figure 6). Yet, less than half of organizations surveyed have an EPMO and only 44 percent of those EPMOs are highly aligned to the organization’s strategy.

Figure 6: IMPROVE PROJECT OUTCOMES WITH AN ALIGNED EPMO

100% 80% 60%

42%

27% more

71% 56%

less

62%

59% 47%

40%

41%

54% 38%

20%

13%

17%

0% MET GOALS/ INTENT

WITHIN BUDGET

High Alignment

ON TIME

SCOPE CREEP

PROJECTS DEEMED FAILURES

Low Alignment

Overall, a well-aligned EPMO can boost performance. In addition, EPMOs and PMOs can: Free executives to think strategically. Rather than being bogged down in project details, executives can focus on strategic alignment. Increase strategic flexibility. A PMO creates the capacity to select the projects best suited to each moment. Drive business growth through customer satisfaction. A PMO increases the chance that projects will be delivered on time and on budget, which provides tangible value to customers. Improve decision making. Organizations can better evaluate the benefits and risks of individual projects in the context of the entire portfolio.

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THEY DRIVE SUCCESS WITH EXECUTIVE SPONSORSHIP Effective executive sponsorship is critical to the success of an organization’s strategic initiatives—an executive sponsor’s active engagement is actually the top driver of project and program success. When more than 80 percent of projects have executive sponsor support, 65 percent more projects are successful (76 percent versus 46 percent, see Figure 7). Despite this finding, only three in five projects have engaged executive sponsors.

Figure 7: IMPROVE PROJECT OUTCOMES WITH ACTIVE SPONSORS

66% 40%

76% 46% Met goals/intent

On time

Within budget

40%

10%

48%

21% Scope creep

62% 36%

Has executive sponsor support Projects deemed failures

Does not have executive sponsor support

Effective executive sponsors have thorough knowledge of a project and how it connects to business strategy. And owing to their position and experience, they have the necessary skills and authority to clear roadblocks, the confidence to make quick and effective decisions, and the influence to champion the project with senior management and position it as a top priority. The best executive sponsors can also motivate and engage a project team.

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STRENGTHEN THE CONVERSATION TO IMPROVE SUCCESS All change in an organization happens through projects and programs. When a project and program management mindset is embedded in an organization’s DNA, performance improves and competitive advantage accelerates. Strengthen the conversation around the importance of project management and the issues essential to improving project and business results—the right skill set, the EPMO, and executive sponsors. Spark the discussion around the strategic importance of project management with these essential points: Project management empowers people, rather than restricts them. Project management encourages innovation by facilitating teamwork and collaboration. Project management helps organizations fulfill client objectives without risking their own profitability. Project management practices, implemented from day one, improve the chances of delivering a project on time and on budget. Project management practices serve as a valuable competitive advantage.

MAKE THE DIFFERENCE TOGETHER Ultimately, an organization’s success is not simply the result of making sure the right tactical elements are in place, it also requires that everybody be on the same page. Strong project management comes from leaders— at all levels—who foster an environment that encourages flexibility and innovation. Their goal is to develop and support the project, program, and portfolio teams that will turn their ideas and vision into real results. However, we see a gap in how executive leaders and PMO directors perceive organizational success and their organization’s performance in formulating strategy, prioritizing and funding projects, executing strategic projects, and identifying lessons learned (see Figure 8).

Figure 8: SUCCESS IN PERFORMING EACH ACTIVITY LAST THREE YEARS (EXCELLENT/GOOD) Formulate strategy appropriate for changing market conditions

Prioritize and fund the appropriate initiatives/projects

Successfully execute initiatives/projects to deliver strategic results

Feed lessons from successful strategy back into strategy formulation

Feed lessons from failed strategy back into strategy formulation

Executive Leaders

83% 59%

78% 55%

74% 59%

68% 35%

67% 34%

PMO Directors

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Further perceptual gaps exist around the benefits realized by use of formal project management to improve risk identification and mitigation, success with complex projects, customer satisfaction, and success with organizational change (see Figure 9).

Figure 9: BENEFITS OF FORMAL PROJECT MANAGEMENT

Higher organizational agility

45% 40%

Greater cost savings

45% 37%

Improved risk identification and mitigation

41% 61%

Competitive edge

39% 31%

Better success with organizational change

38% 50%

Improved customer satisfaction

37% 57%

Return on investment is met or exceeded

33% 31%

Faster time to market

29% 32%

Improved success with complex projects

23% 63%

Higher revenues/profits

23% 27% Executive Leaders

PMO Directors

We also see a disconnect in how project management is viewed within an organization. Almost three-quarters of executive leaders feel their organization fully understands the value, whereas less than half of PMO directors feel the same. The disparity suggests that organizations aren’t truly embracing a culture of project management—further proof that it’s time to strengthen the conversation in a way that reinforces its strategic value.

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STRENGTHEN THE CONVERSATION TO IMPROVE VALUE Spark the discussion around the strategic value of project management with these proven practices: Embrace project and management as a strategic competency that reduces risks, cuts costs, and improves success rates. Invest in leadership and strategic and business management skills for project managers, in addition to technical skills. Align the EPMO to organizational strategy and recognize that all strategic initiatives are projects and programs. Engage executive sponsors and ensure they can commit to meaningful support of project teams. Work together—executive leaders, PMO directors, and project managers—to make a difference by supporting the investment in project, program, and portfolio management.

With these ongoing challenges, the good news is that the executives we spoke to are actively building the awareness of project management and its potential to deliver better business results. They are setting an example for other organizations that are less certain of the benefits—or less certain of how to invest in project management.

ENGAGE ALIGN

INVEST

“Good project managers are highly valued,” said Mr. Fjeldheim, “whether they are in IT or in engineering. If they are effective at being able to get the job done, then they are viewed very positively within the organization and in demand.”

COMMUNITY

“If [project managers] are effective at being able to get the job done, then they are viewed very positively within the organization and in demand.” Norm Fjeldheim | Senior Vice President and CIO Qualcomm

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Despite the challenges, it is encouraging that senior executives and PMO directors share optimism about the future, agreeing on the importance of improving their competitiveness in the next three years. Eight in ten executive leaders and PMO directors agree that it’s essential to focus on formulating strategies appropriate for changing market conditions, prioritizing and funding the appropriate initiatives and/or projects, successfully executing initiatives and/or projects in order to deliver strategic results, and using the lessons from unsuccessful strategy for strategy formulation (see Figure 10).

Figure 10: IMPORTANCE OF IMPROVING COMPETITIVENESS OVER NEXT THREE YEARS (ESSENTIAL/VERY IMPORTANT) Formulate strategy appropriate for changing market conditions

91% 88% Prioritize and fund the appropriate initiatives/projects

88% 91% Successfully execute initiatives/projects to deliver strategic results

90% 93% Feed lessons from successful strategy back into strategy formulation

83% 74% Feed lessons from failed strategy back into strategy formulation

82% 81% Executive Leaders

PMO Directors

Mr. Seliger described the advantages of project management approaches as delivering the intended business benefit. “That is what it is all about, right?” he said. “It is interesting because earlier this year I hired a project management professional in my organization. Prior to her hire, I would say my business unit was challenged at managing complex projects, and it was like a breath of fresh air having a professional project manager managing projects very well. Her presence is allowing us to get better support from senior leadership and actually deliver on our projects, which unfortunately we frequently failed to do in the past.” Project managers can be powerful liaisons to leadership because they present senior executives with the perspectives of teammates and stakeholders. By sharing their knowledge with confidence, project managers can deliver precisely what organizations need—successful projects that strategically align with business objectives. Alex Gilbert, Manager, Project Management at a public utility company, agrees, citing a reason the C-suite appreciates and supports project management: “When they have questions, we have answers.” As project management continues to play an increasingly important role, senior executives, PMO directors, and project managers can reinforce that optimistic outlook. “The project manager is key in getting better value for the money by running a project efficiently and successfully,” said Mark Wagstaff, Executive Director, Program Manager Community at UBS. “I think that the need for project management expertise can only increase because we want to change more; we want to do more things.”

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CONCLUSION Lack of improvement in key organizational capabilities and the decline in others may explain the weaker project outcomes that we see in this year’s Pulse results. Driving and realizing improvement is possible. In fact, our research reinforces both the tangible and intangible value project management delivers to an organization, including risk reduction, cost saving, and, of course, more successful projects and programs. In addition, our research continues to show that when proven project, program, and portfolio management practices are implemented, projects meet their original goals and business intent far more often, leading us to the following recommendations.

SHIFT THE THINKING Embrace project and program management as a strategic competency that reduces risks, cuts costs, and improves success rates; and recognize that effective project and program management is vital to surviving the continuing economic uncertainty.

STRENGTHEN THE CONVERSATION Advance the thinking internally, including with the C-suite, around three issues essential to improving both project and business results: INVEST in leadership and strategic and business management skills for project managers, in addition to technical skills.

ENGAGE executive sponsors and ensure they can commit to meaningful support of project teams.

ALIGN the EPMO to organizational strategy and recognize that all strategic initiatives are projects and programs.

WORK TOGETHER TO MAKE A DIFFERENCE Close the gaps between how executive leaders, PMO directors, and project managers perceive organizational investment in project, program, and portfolio management—and the business value they deliver.

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Although these recommendations are solid, unless internal stakeholders, particularly the C-suite, fully understand the business value that projects and programs deliver, we aren’t confident there will be more meaningful and sustained support of the discipline. And that raises concerns about statistically significant improvements in project and program success factors. Further research is needed to understand why organizations do not fully appreciate that all strategic initiatives are projects and programs. We believe this disconnect may result from the fact that so few organizations monitor and measure the benefits that projects and programs deliver. Our research confirms that only 17 percent of organizations report high benefits realization maturity, raising myriad questions about how other organizations determine the business value of projects and programs. PMI believes it’s time for organizations to recognize that benefits realization is a central component of project and program management—it is the means to determine ROI as well as to identify the many intangible benefits that projects and programs enable throughout the business, including, for example, issues of customer satisfaction. We know that when project and program benefits are identified as integral parts of the business case, and tracked from project initiation through transfer to the business and beyond, organizations can better ensure they’re delivering business value. In short, having greater awareness of how strategic objectives are achieved requires a benefits realization process. In our continuing emphasis on the fundamental importance of project, program, and portfolio management, we will turn our attention in the year ahead to benefits management as a means to improve.

Strengthen

the

Conversation

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APPENDIX: Section 1 SURVEY RESULTS FROM 2,428 PROJECT MANAGEMENT PRACTITIONERS (GLOBAL TOTAL)

Q: Does your organization have a Project Management Office?

Q: What type(s) of PMO does your organization have? (Select all that apply)

Global Total

Global Total

Yes

Departmentspecific, regional or divisional PMO(s)

68%

No

Enterprise-wide PMO

32% 0%

20%

66%

40%

60%

80%

49% 0%

20%

40%

60%

80%

Q: To what extent does your organization use standardized project management practices? Global Total Standardized practices are used throughout the entire organization

24%

Standardized practices are used by most, but not all, departments

33%

Standardized practices are used by some departments

36%

Standardized practices are not used

7% 0%

10%

20%

30%

40%

20


APPENDIX: Section 1 Q: How often does your organization use each of the following? Global Total Project performance measures

29%

36%

24%

8% 3%

Risk management practices

28%

35%

24%

10% 3%

Change management practices

27%

37%

24%

9% 3%

Program management

25%

37%

Resource management to estimate and allocate resources

25%

Internal/proprietary methodologies

24%

Project portfolio management

38% 38%

21%

Earned value management

11%

Critical chain project management practices

9%

27%

Agile/Incremental/Iterative project management practices

9%

28%

Lean project management practices

7%

25%

Scrum

7%

20%

Agile/Incremental/Iterative program management practices

6%

22%

Agile/Incremental/Iterative portfolio management practices

6%

18%

Six Sigma

6%

20%

Extreme project management practices

6%

Event chain methodology PRINCE2

32%

0%

Always

15%

19%

16% 27% 23% 27%

19%

25%

31%

27%

28%

21%

41%

20%

Often

17%

22%

25%

20%

13%

20%

27%

9%

17%

20%

29%

9%

14% 19%

27%

6%

21%

31%

21%

8% 12%

26% 28%

13%

10% 4%

22%

37%

3% 13% 6% 2%

24%

15%

23%

25%

21%

Waterfall project management practices

10%

21%

33%

12%

23%

60%

40%

Sometimes

60%

Rarely

80%

100%

Never

Note: Numbers may not sum to 100% due to rounding.

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APPENDIX: Section 1 Q: Do you believe that your organization fully understands the value of project management?

Q: Does your organization currently have…? Global Total %Yes Ongoing training for staff on the use of project management tools and techniques

Global Total Yes

55%

No

45% 0%

20%

40%

61%

A formal process for transferring knowledge from one part of the organization to another (known as “knowledge transfer”)

47%

A formal process to mature existing project/portfolio management practices

47%

60%

A formal process for developing project manager competency

45%

A defined career path for those engaged in project or program management

45% 0%

20%

40%

60%

Q: How would you characterize the [project/program/portfolio] management maturity of your organization? Global Total

18%

Project management maturity Program management maturity Portfolio management maturity

46%

17%

45%

16% 0%

40%

Medium Low

38%

40% 20%

High

36%

Note: Numbers may not sum to 100% due to rounding

44% 60%

80%

100%

Q: How would you characterize…? Global Total The alignment of the projects you manage to the strategy of your organization

44%

Your organization’s benefits realization process maturity level

17%

The agility of your organization

44%

15% 0%

46%

60%

80%

Medium


43% 40%

High Low

39%

43% 20%

11%

100%

22


APPENDIX: Section 1 Q: In your estimation, what percentage of the projects completed within your organization in the past 12 months…? Global Total

Mean Percentages

62%

Successfully met the original goals and business intent of the project

49%

Finished within their initially scheduled times

53%

Finished within their initial budgets

45%

Experienced scope creep or uncontrolled changes to the project’s scope

32%

Project budget lost when a project fails

16%

Were deemed failures

59%

Included project sponsors who were actively supportive of the project 0%

20%

40%

60%

80%

Q: Of the projects started in your organization in the past 12 months that were deemed failures, what were the primary causes of those failures? (Select up to 3) Global Total

41%

Change in organization’s priorities

38%

Change in project objectives

37%

Inaccurate requirements gathering Opportunities and risks were not defined

31%

Inadequate vision or goal for the project

31%

Inaccurate cost estimates

30%

Inadequate/poor communication

30%

Inadequate sponsor support

29%

Poor change management

29%

Inaccurate task time estimate

28%

Resource dependency

26%

Inadequate resource forecasting

26%

Limited/taxed resources

22%

Inexperienced project manager

21%

Team member procrastination

14%

Task dependency

12%

Other

9% 0%

10%

20%

30%

40%

50%

23


APPENDIX: Section 1 Q: How high a priority is each of the following within your organization? Global Total Development of talent with the necessary technical skills for the management of projects

13%

Development of talent with the necessary leadership skills for the management of projects

12%

Development of talent with the necessary business skills for the management of projects

27% 27%

32%

19%

10%

33%

18%

10%

Very high Somewhat high Moderate Somewhat low Very low

11% 0%

26% 20%

33% 40%

20%

11%

80%

60%


100%

Q: How high a priority is each of the following within your organization? Global Total Creating a culture receptive to organizational change

14%

27%

32%

16%

11%

Creating a culture that values project management

13%

25%

33%

19%

11%

Developing strategy implementation skills among executives

11%

19%

11%

Development of skills for executive sponsors of projects

8%

26% 21%

33% 31%

20%

40%

23% 60%


17% 80%

100%

51%

North America

44%

47%

9%

21%

EMEA

19%

Asia Pacific 40%

60%

80%

100%

9%

Latin America

High

Somewhat low

Global Total

Global Total

20%

Moderate

Region of responding organizations

Q: How would you characterize the alignment of the enterprise-wide PMO to the strategy of your organization?

0%

Somewhat high

Very low

0%

Alignment of enterprise-wide PMO to strategy of organization

Very high

Medium

Low


0%

10%

20%

30%

40%

50%


24


APPENDIX: Section 1 Q: Please select the term that best describes the primary focus of your organization.

Q: Which of these includes the total annual revenue of your organization (US$)?

Global Total

Global Total

17%

Information Technology Manufacturing

9%

Energy

9%

Healthcare

6%

Telecom

6%

Construction

6%

16%

$1 –$4.999 billion

9%

$500–$999 million

8%

Government

30%

$5 billion or more

11%

Financial Services

8%

$250–$499 million

14%

$50–$249 million

4%

Consulting Training/Education

3%

Aerospace

3%

Transportation / Logistics / Distribution

3%

Automotive

2%

Food and Beverage

2%

Retail

2%

Pharmaceutical

2%

Mining

1%

Legal

<1%

Other

23%

Less than $50 million 0%

10%

20%

30%


5% 0%

5%

10%

15%

20%


25


APPENDIX: Section 2 SURVEY RESULTS FROM 192 SENIOR EXECUTIVES Q: How would you rate your organization’s success in performing the following activities over the last three years? Senior Executives Formulating strategy appropriate for changing market conditions

36%

Prioritizing and funding the appropriate initiatives/projects

31%

48%

Successfully executing initiatives/projects in order to deliver strategic results

32%

42%

48%

13% 3% 1% 18% 3% 1%

Excellent Good Fair Somewhat poor Poor

Feeding lessons from successful strategy implementation back into strategy formulation

23%

Feeding lessons from failed strategy implementation back into strategy formulation

25% 0%

21%

46% 42%

20%

40%

3% 1%

26%

4% 1%

24%

7% 2%

80%

60%


100%

Q: Compared with peer companies, how would you rank your organization on each of the following? Senior Executives Financial Performance

31%

Strategy Formulation

29%

Execution of the formulated strategy

29%

46%

19% 3% 1%

43%

22%

6% 1%

Well above average Somewhat above average Average Somewhat below average

0%

37% 20%

40%

60%

26%

6% 1%

80%

100%

Well below average Note: Numbers may not sum to 100% due to rounding

Q: How important will improving the various aspects of strategy implementation be to the competitiveness of your organization over the next three years? Senior Executives Formulating strategy appropriate for changing market conditions

45%


39%


56%

46%

8% 1%

48%

Essential Very Important Somewhat important

13%

Minimally Important Not at all important


33% 50%

33%


20%

14%

39%

43% 0%

10% 1%

40%

60%

17% 80%

3%


1% 1% 100%

26


APPENDIX: Section 2 Q: Where in your organization does responsibility lie for managing the implementation of strategy through high-priority initiatives and projects? Senior Executives

55%

The CEO and/or other members of the C-suite manage it directly

31%

A strategic management functional group/role An organization-wide project management office responsible for projects and programs Responsibility for management varies depending on the specific field of strategy A series of distributed project management offices responsible for different functions that report up to a central authority

6% 5% 3% 0%

20%

40%

60%

Q: Do you believe that your organization fully understands the value of project management? Senior Executives

74%

Yes

No

26% 0%

20%

40%

60%

80%

Q: How high a priority is each of the following within your organization? Senior Executives Development of talent with the necessary technical skills for the management of projects

37%


35%

32%


41%

37%

Creating a culture receptive to organizational change

29%


29%


26% 0%

3%

19%

7%

2%

9%

1%

6%

4%

18%

35%

24%

35%

26%

35% 20%

6%

25%

42%

28%


28%

19%

40%

25% 60%

9% 8% 12%

80%

4%

Very high Somewhat high Moderate Somewhat low Very low Note: Numbers may not sum to 100% due to rounding

2% 3% 100%

27


APPENDIX: Section 2 Firmographics: Senior Executives Region

Organization’s annual revenue (US$)

North America EMEA Asia Pacific

$5 billion or more

67%

$1-$4.99 billion

20%

33%

$500-$999 million

7%

Latin America 6% 0%

17%

26%

$250-$499 million

20%

40%

60%

80%

25% 0%

10%

20%

30%

40%


APPENDIX: Section 3 SURVEY RESULTS FROM 282 PMO DIRECTORS

Q: How would you rate your organization’s success in performing the following activities over the last three years? PMO Directors Formulating strategy appropriate for changing market conditions

15%

44%


12%

43%


13%

45%


6%

29%


6%

28%

0%

20%

30% 30%

10% 5%

27% 35%

40%

12% 3% 19%

30%

23% 80%

60%

7% 5%

10% 13%

Excellent Good Fair Somewhat poor Poor Note: Numbers may not sum to 100% due to rounding

100%

Q: Compared with peer companies, how would you rank your organization on each of the following? PMO Directors Financial performance Strategy formulation

22%

37%

12%

31%

38%

8%

32%

13%

2% 4%

Well above average Somewhat above average Average Somewhat below average

Execution of the formulation strategy

12% 0%

28% 20%

43% 40%

60%

12% 80%

5% 100%

Well below average Note: Numbers may not sum to 100% due to rounding

28


APPENDIX: Section 3 Q: How important will improving the various aspects of strategy implementation be to the competitiveness of your organization over the next three years? PMO Directors Formulating strategy appropriate for changing market conditions

51%

37%

9% 3% 1%

Very important


42%

49%

6%3%

Somewhat important Minimally important


48%


45%

27%


6%1%1%

48%

30% 0%

20%

51% 20%

40%

60%

Q: Where in your organization does responsibility lie for managing the implementation of strategy through high-priority initiatives and projects?

The CEO and/or other members of the C-suite manage it directly

80%

Q: Do you believe that your organization fully understands the value of project management?

A series of distributed project management offices responsible for different functions that report up to a central authority

8%

46%

No

13% 9%

100%

Yes

26%

An organization-wide project management office responsible for projects and programs


PMO Directors

42%

A strategic management functional group/role

5% 1%

Not important at all

15% 3%1%

PMO Directors

Responsibility for management varies depending on the specific field of strategy

Essential

54% 0%

20%

40%

60%

2%

Other 0%

10%

20%

30%

40%

50%

29


APPENDIX: Section 3 Q: How high a priority is each of the following within your organization? PMO Directors Development of talent with the necessary technical skills for the management of projects

14%

31%

30%

18%

8%


12%

36%

25%

18%

9%


11%

Creating a culture receptive to organizational change

16%


14%

Very high Somewhat high Moderate Somewhat low


8%


8% 0%

31%

27%

33%

28%

33%

29%

31% 21% 20%

21%

32%

Very low

13%

11%

16%

9%


18%

30% 40%

10%

24%

11% 17%

80%

60%

100%

Firmographics: PMO Directors Region

Organization’s annual revenue (US$)

North America

$5 billion or more

55%

23%

$1-$4.99 billion EMEA

22%

Asia Pacific

17%

$500-$999 million

11%

$250-$499 million

14%

8%

$50-$249 million Latin America

9% 0%

15%

Less than $50 million 20%

40%

60%

27% 0%

10%

20%

30%


30

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